Six tips on pricing strategies you can use to improve sales
It is very important to succeed in business, so there is a growing importance attached to subscriptions, smart strategies and services in many businesses to help them grow. You may have considered implementing these tools in your enterprise, or you might have started to use these strategies.
When it comes to pricing, one of the worst mistakes you can do is randomly place prices, without any explanation or reasoning behind it – unfortunately, many business owners make the mistake. If you want to be more effective when you are placing your prices without resorting to making random guesses, there are a number of things that you need to know. You can even read more about pricing here:
https://answerfirst.com/flat-rate-vs-usage-rate/
The more similar your presentation with competitor products, the more sales it will cost you
When you are building a website, one of the rules you need to always keep in mind is the reduction of choices you give to the customer. You might have experienced what is known as ‘action paralyses, where you cannot choose an item because there are too many options in front of you. In the same way, your target market and current customers will end up leaving your site if you present them with too many choices.
Because of this, you might assume that giving multiple products the same or similar prices would be a better approach. However, research studies have shown it presents customers with the same problem – there are too many products to choose from, and the ultimate choice they make makes them feel like they are missing out on the other products.
The best way to solve the problem is recognizing the psychological aspects of the issue. The best thing would be changing the prices of the products, so that the customer is convinced that they are truly different from each other.
Using price anchoring
This is a clever way of ensuring the customer buys a product, due to noticing stark differences – for instance, placing $5,000 and $3,000 watches next to each other, forcing the customer to place a heavy emphasis on the first piece of information they have gotten to make a choice. In that case, the $3,000 watch will look like a major premium when you place it next to a $100 watch.
You will commonly find this tactic in use when you read a restaurant menu, because the more expensive items will be towards the end of the menu, which makes the other foods seem much cheaperand seem like a bargain.
Weber’s law
This law, in easier terms, when something goes through a change, the strength of the change will be determined by how big the thing was before the change occurred. This rule is popular in the world of marketing, particularly in the changes in prices of services and products.
According to the general rule, the best percentage margin when applying price changes is 10 percent, as the customers and clients are not going to notice the change easily, or they might notice but accept it easier than if you would raise it higher than that.
There are various other variables that can easily have an effect on pricing, such as the supply and demand, as well as ability to inspire loyalty to your brand. This law will mostly serve as a guideline to help you manage your prices rather than rigidly pricing them.
Eliminate or reduce points of pain in sales process
All neuro-economics experts in the field will agree on one thing – the human brain is oriented to always spend money until it ends completely. Your business will likely attract different people, depending on the pricing tactics you use for the products. In addition, there are a number of methods you can use to reduce the purchasing pain of the customer, and encourage them to spend more while increasing their satisfaction.
Some of the methods can include:
- Bundling the most commonly bought items, similar to what supermarkets do when you shop for an item and see another attached to it as an ‘offer’.
- Reframing the value of the product, for instance giving your subscribers a chance to see what they are getting out of a monthly subscription instead of a yearly one
- Appealing to the pleasure or utility aspect – for the conservative customers, it is easier to appeal to their utility, while you can appeal to liberal spenders through the pleasure aspects of the product.
- Adding subtle details to the fee, like saying ‘a modest $2 fee’ instead of ‘a $2 fee’
- Emphasizing that the product logistics are free, for instance, shipping fees
You always see the discount stores having pries of their products ending in ‘9’ or another odd number like ‘7’. This is among the oldest psychological pricing methods in existence, and its effectiveness is always assured for you. In fact, the number ‘9’ will always tend to outperform all the other numbers, even though they seem higher on average.
Continue reminding the customer of the time the y have gained in spending
When you look at many consumer advertisements that are targeted to the low and medium level consumers, they will always emphasize on the time spent on spending on that specific product, rather than the prices. While this may seem strange on a surface level, it actually makes sense – and it is all because they want to appeal to the listener’s emotions and experiences.
A customer will tend to remember their positive experiences with the product, much more often than they would remember the price of that product, according to recent research findings. This means that numerous purchases will tend to fall in the ‘experiential’ category, where the customer wants to try out the product or service and see what it does for them.
An instance of this would be concert tickets, because the customer thinks of their experience at a concert, rather than the price of the ticket.
Final thoughts
While pricing might seem difficult to implement when you do not know what goes into it, it is more of a psychological effect you are going for. Therefore, you should aim to know the rules and appeal to your customers in subtle ways, and see what it does for you in the future.
